Small Businesses Lead New Company Registrations in November: MCA Report

New Delhi, Jan 6 (KNN) Ministry of Corporate Affairs’ monthly update revealed that small businesses have been the predominant registrants of new companies across various sectors in November.

The data showed that the average paid-up capital, indicating the share subscription paid by investors, was just Rs 1 lakh for farm-sector registrations, as reported by Mint.

For new manufacturing units, this figure stood at Rs 27 lakhs, emphasising a higher capital requirement.

Additionally, services firms had an average paid-up capital of Rs 4.2 lakhs, reflecting the relatively modest size of these newly established businesses.

In November, over 13,300 firms were established, and the shares of these firms were sold to investors for a total of Rs 1,232 crores, as indicated by the data fr0m the Ministry.

Industry representatives argue that, although the growth of the corporate sector generally involves an expansion of small businesses, certain practices by large corporations can distort the data.

 “Growth in small businesses is good for India’s efforts to become a developed economy,” said Chandrakant Salunkhe, President of the Small and Medium Enterprises (SME) Chamber of India.

He further added, “However, it has also been observed that several large corporations set up small companies to secure their interests in terms of compliance of timely payments to their small business clients."

According to industry observers, the strategy of establishing smaller subsidiaries to engage with Micro, Small and Medium Enterprises (MSMEs) enables large companies to circumvent the disclosure requirement associated with their own names.

In recent months, small companies have consistently dominated registrations. In the current financial year, the month of May recorded the highest number of registrations, with over 17,000 companies attracting an initial investment of Rs 3,204 crores.

Following closely, September saw 13,995 companies getting registered, with an investment of Rs 1,868 crores.

Salunkhe mentioned that the Chamber intends to make representations to various political parties advocating for the protection of small businesses' interests through a favourable regulatory and tax regime.

Official estimates suggest that there are over 60 million unincorporated non-agricultural MSMEs in the country.

(KNN Bureau)